Australian FOREX Daily Outlook 01/04/2008

ECB concerned with inflation, XAU and Oil tumble.

CURRENCY TRADING SUMMARY – 01 APRIL 2008 (00:30GMT)

·U.S. Dollar Trading (USD) was choppy losing ground versus a number of majors in the early part of the New York session, yet any further negativity was capped on a surprisingly boisterous reading in Chicago PMI, which rose to 48.2 for the month of March (Previous: 44.5 Forecast: 46.5). That said the figure still remained below the 50 level, signaling a contraction rather than an expansion in output. In U.S. share markets the NASDAQ was up by 18 points (0.4%) whilst the Dow Jones was also up by 46 pts (0.4%). Crude oil fell by US$3.47 a barrel to US$100.30 on news that outflow from Iraq will be fully restored. Looking ahead, ISM Manufacturing is expected to come in at 47.5 for the month of February, below the previous release of 48.3.

·The Euro (EURO) rallied after a European Union report showed consumer prices accelerated at the fastest pace in almost 16 years this month. In other news ECB member Liikanen mentioned that the outlook of growth in Europe had become “more subdued”, whilst inflation had accelerated. Overall the EURUSD traded with a low of 1.5760 and a high of 1.5896 before closing the day at 1.5783 in the New York session. PMI Manufacturing for the month of March is expected to come in at 52 (Previous: 52.3), whilst Unemployment Rate is expected be unchanged at 7.1%.

·The Japanese Yen (JPY) held firm between a defined range tracking equity markets. Overall the USDJPY traded with a low of 98.81 and a high of 100.19 before closing the day at 99.73 in the New York session. UPDATE: Reuters Tankan Survey for the first quarter was released below expectations at 11 (Forecasts: 13 Previous: 19).

·The Sterling (GBP) continued to depreciate as the EURGBP traded at a record high of 79.73 pushing the Sterling Pound down by 8.2% for the first quarter. The pound also slipped for a third day against the dollar, as signs the worldwide credit squeeze is hurting the economy prompted traders to bet on an interest-rate cut next week by the BoE. Overall the GBPUSD traded with a low of 1.9815 and a high of 1.9979 before closing the day at 1.9832 in the New York session. PMI manufacturing is expected to come in at 51, previous 51.3.

·The Australian Dollar (AUD) eased on the back of softer commodity prices trading with a low of 0.9105 and a high of 0.9181 before closing the day at 0.9136 in the New York session. The RBA s widely expected to keep rates on hold Tuesday at 7.25%

·Gold (XAU) decline in commodity prices reduced demand for precious metals as a hedge against inflation. XAU traded with a low of 912.90 and a high of 940.75.

TECHNICAL COMMENTARY

·Euro – 1.5775

Initial support at 1.5727 (Mar 27 low) followed by 1.5584 (Mar 26 low). Initial resistance is now located at 1.5896 (Mar 31 high) followed by 1.5904 (Mar 17 low).

·Yen – 99.85

Initial support is located at 98.89 (Mar 26 low) followed by 98.46 (Mar 20 low). Initial resistance is now at 100.33 (Mar 26 high) followed by 101.04 (Mar 25 high)

·Pound – 1.9840

Initial support at 1.9927 (Mar 26 low) followed by 1.9849 (Mar 25 low). Initial resistance is now at 2.0111 (Mar 26 high) followed by 2.0145 (61.8% retracement of the 2.0398 to 1.9737)

·Australian Dollar – 0.9130

Initial support a 0.9122 (Mar 26 low) followed by 0.9073 (Mar 25 low). Initial resistance is now at 0.9243 (Mar 26 high) followed by 0.9290 (61.8% retracement of the 0.9499 to 0.8953 decline)

·Gold – 920.00

Initial support at 912.60 (Mar 31 low) followed by 908.94 (7 ½ month bull channel resistance). Initial resistance is now at 954.98 (Mar 26 high) followed by 984.00 (61.8% retracement of the 1032.50 to 905.03 decline)